Price Reductions on Homes for Sale are going down
Stefanos Chang recently wrote a great piece for The
Wall Street Journal speaking to not only the miniscule inventory but about
the lack of price reductions that are also happening with homes for sale. In
“normal” markets–which we haven’t had for quite some time–homes sometimes see
price reductions (although
we just wrote about why this shouldn’t be happening) and this gives Buyers a
chance to wait a bit, watch the market and have time to decide when to jump in.
It’s also an indication of a slower ‘Sellers’ market, however that is NOT the
situation here in the Silicon Valley; Buyers are rising to the prices of Sellers
who are pricing there homes–most of the time–quite well. If you’re a Buyer and
you can’t seem to get a foothold in this market with multiple offers and a small
inventory, reach out to us and we would happy to help!
“The end of the year typically represents prime time for savvy home buyers who pounce on last-ditch discounting by sellers. But in another sign that 2013 may be brighter for housing, price reductions on for-sale homes are getting harder to find in many markets. Out of the 100 largest metro markets, 33.6% of homes for sale saw price drops from their original or recent listing price in the last six months, according to data to be released on Wednesday by home listing and research company Trulia. In the same period a year earlier, a larger share, 36.7% of homes, went down in price. Overall, 83 of the 100 markets studied had fewer price reductions than in the previous reporting period.
In the case of homes that have been listed for more than six months, the current price was compared with the price from six months ago. Foreclosures were excluded from the data.
On the metro level, the difference was even starker. In Oakland, Calif., which recorded the smallest percentage of price reductions, only 15% of homes dropped in price. In the same period a year ago, 31% of homes experienced price cuts. “As prices strengthen and the market gets tighter, sellers are better able to sell without having to reduce prices,” said Jed Kolko, chief economist for Trulia.
The year-over-year median sales price for existing homes has risen for nine consecutive months through November, the most recent month when data were available, according to Walter Molony, a spokesman for the National Association of Realtors. Fewer asking-price reductions could mean sales prices continue to improve.
Couple that with tighter than normal inventory in markets across the country, particularly in the West, and the reasons for declining price drops become more evident. At the current pace of sales, it would take 4.8 months to sell all the homes listed for sale in November. The Realtors group considers a six-month supply of homes to be a balanced market.
While the national trend is toward fewer price reductions, some markets are faring better than others. Springfield, Mass., recorded the highest rate of price reductions, with 48% of its on-market homes cutting their prices. The percentage remains unchanged from the same period a year earlier. Five of the 10 markets with the highest share of price reductions were in New England. What markets like Springfield lack compared with healthier markets is some combination of fundamentals such as job growth, low vacancy and fewer foreclosures, Mr. Kolko said.
As for the next indicator that the housing market is on the right path, Mr. Kolko says to look to new construction. “The milestone to watch for in 2013 is whether inventory bottoms,” he said.”
“The end of the year typically represents prime time for savvy home buyers who pounce on last-ditch discounting by sellers. But in another sign that 2013 may be brighter for housing, price reductions on for-sale homes are getting harder to find in many markets. Out of the 100 largest metro markets, 33.6% of homes for sale saw price drops from their original or recent listing price in the last six months, according to data to be released on Wednesday by home listing and research company Trulia. In the same period a year earlier, a larger share, 36.7% of homes, went down in price. Overall, 83 of the 100 markets studied had fewer price reductions than in the previous reporting period.
In the case of homes that have been listed for more than six months, the current price was compared with the price from six months ago. Foreclosures were excluded from the data.
On the metro level, the difference was even starker. In Oakland, Calif., which recorded the smallest percentage of price reductions, only 15% of homes dropped in price. In the same period a year ago, 31% of homes experienced price cuts. “As prices strengthen and the market gets tighter, sellers are better able to sell without having to reduce prices,” said Jed Kolko, chief economist for Trulia.
The year-over-year median sales price for existing homes has risen for nine consecutive months through November, the most recent month when data were available, according to Walter Molony, a spokesman for the National Association of Realtors. Fewer asking-price reductions could mean sales prices continue to improve.
Couple that with tighter than normal inventory in markets across the country, particularly in the West, and the reasons for declining price drops become more evident. At the current pace of sales, it would take 4.8 months to sell all the homes listed for sale in November. The Realtors group considers a six-month supply of homes to be a balanced market.
While the national trend is toward fewer price reductions, some markets are faring better than others. Springfield, Mass., recorded the highest rate of price reductions, with 48% of its on-market homes cutting their prices. The percentage remains unchanged from the same period a year earlier. Five of the 10 markets with the highest share of price reductions were in New England. What markets like Springfield lack compared with healthier markets is some combination of fundamentals such as job growth, low vacancy and fewer foreclosures, Mr. Kolko said.
As for the next indicator that the housing market is on the right path, Mr. Kolko says to look to new construction. “The milestone to watch for in 2013 is whether inventory bottoms,” he said.”
This blog is courtesy of The Dawn Thomas Team who is an
award-winning Real Estate Agent team at Intero Real Estate Services in Los Altos
650-701-7822. We help nice people with selling and buying homes from Palo Alto
to West San Jose!
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